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Partisan warfare over the looming debt ceiling crisis escalated Tuesday as GOP leaders once again refused to consider any tax hikes and President Barack Obama warned that, absent a deal, he can't guarantee older Americans will continue receiving Social Security checks next month.
"There may simply not be the money in the coffers to do it," Obama said, according to excerpts of a CBS News interview scheduled to air Tuesday night.
"We can't guarantee -- if there were a default -- any specific bill would be paid," White House Press Secretary Jay Carney told reporters Tuesday afternoon.
Top lawmakers from both sides of the aisle are scheduled to resume negotiations with Obama at the White House at 3:45 p.m.
Administration officials have warned that a failure to raise the current $14.3 trillion ceiling by August 2 could trigger a partial default. If Washington lacks the money to meet its bills, interest rates could skyrocket and the value of the dollar could decline, among other things.
Negotiators have been debating terms to generate savings of up to $4 trillion over 10 to 12 years, a response to GOP demands for significant spending cuts in exchange for any debt ceiling increase. Democrats are furious, however, that Republicans refuse to consider any tax hikes as part of a deal.
"There are no tax increases on the table," House Speaker John Boehner, R-Ohio, told reporters Tuesday morning.
"One hundred percent of the problem is on the spending side," said Rep. Jeb Hensarling, R-Texas, another member of the GOP leadership.
Senate Minority Mitch McConnell, R-Kentucky, said he has lost any hopes of a "grand bargain" with the White House.
"As long as this president is in the Oval Office a real solution (to the country's fiscal problems) is unattainable," McConnell said. Obama "will do almost anything to protect the size and the scope of Washington D.C.'s burgeoning bureaucracy."
Democrats also dug in their heels.
Republicans want to "protect the wealthiest among us -- the millionaires and billionaires -- and hurt the average, middle-class senior citizen," said Sen. Chuck Schumer, D-New York. "This approach is not balanced. It is not fair. It is not moral, and it will not be accepted."
As the rhetoric intensified, Treasury Secretary Tim Geithner warned that time is running out. The secretary said he wants to see a deal to raise the debt limit and cut projected spending by the end of this week -- or next week at the latest -- so that Congress will have enough time to turn the deal into law.
"We know we don't have a lot of time," Geithner said. "Default is not an option."
Before meeting with Obama at the White House, Senate Republicans offered a politically inspired fallback option to the debt ceiling impasse, proposing three short-term increases in the amount the government can borrow while at the same time registering the disapproval of Congress for such a move.
McConnell told reporters that the process he described would only occur if no agreement is reached by August 2 to raise the federal debt ceiling.
"If we're unable to come together, we think it's extremely important that the country reassure the markets that default is not an option," McConnell said.
However, Republican senators briefed on the plan described it as more of political messaging device than a viable option to avoid default.
The proposal is certain to be rejected by Obama and Democrats.
Obama ruled out the possibility of signing a short-term extension of the federal debt ceiling Monday, insisting that the time has come to tackle the nation's most pressing fiscal problems in a comprehensive way requiring bipartisan compromise on both taxes and spending.
The president continued to push for the largest deal possible -- an apparent rejection of a call by Boehner to focus more narrowly on spending cuts agreed to in an earlier round of negotiations led by Vice President Joe Biden.
It's time to "pull off the Band-Aid" and "eat our peas," Obama told reporters. "Let's step up. Let's do it."
Noting that Republicans have pushed for decisive action on debt reduction, Obama urged them to compromise from their blanket refusal to end Bush-era tax cuts for wealthy Americans. The president said he'd be willing to push Democrats to do something they don't like -- reform Medicare and other entitlement programs that are the party's political legacy -- in an effort to reach his goal of trimming the deficit by $4 trillion.
Obama, who has promised daily meetings until a deal is reached, reiterated his warning Monday against either party taking a "maximalist position" in the ongoing negotiations. The president insisted he is willing to take "significant heat" from his own party on issues such as entitlement reform in order to get a deal done.
Republican leaders should as well, he said, referencing GOP opposition to tax increases.
For his part, Boehner said Monday he still has a sharp disagreement with the White House over not only taxes, but also the "extent of the entitlement problem, and what is necessary to solve it."
"It takes two to tango, and they're not there yet," Boehner said in reference to the administration.
The speaker asserted Tuesday that Obama "talks a good game" when it comes to making concessions for a deal, but "can't quite pull the trigger."
A Republican aide with knowledge of Monday's meeting between Obama and Hill leaders said it included one exchange in which Boehner argued that his side also would find it difficult to vote to reform entitlements, which would likely include delaying or reducing some benefits in order to cut costs.
When Obama pointed out that the Republican-controlled U.S. House had already passed a proposal that would overhaul the government-run Medicare health insurance program for senior citizens, the GOP aide said, Boehner responded: "Excuse us for trying to lead."
According to multiple Democratic officials familiar with the meeting, Obama again made the case for a more comprehensive deal, but also asked House Majority Leader Eric Cantor, R-Virginia, to explain spending cuts in a possible smaller deal based on terms that emerged from the Biden talks.
Those savings totaled about $1.8 trillion, well short of the almost $2.4 trillion that the administration seeks to raise the debt ceiling through 2012. Boehner has said any debt ceiling measure must be accompanied by spending cuts of equal value.
After Cantor's presentation, Obama made the case that bridging the difference between the spending cuts agreed to in the Biden talks and the Republican demand for a debt ceiling deal would require raising revenue, the Democratic sources said. At the same time, congressional Democrats said they need revenue increases through ending tax loopholes or other steps in order to get their caucuses to support an agreement, the sources said.
Lawmakers involved in the White House talks have been asked to bring ideas Tuesday for closing the roughly $600 billion gap between negotiated spending cuts and further savings considered necessary for a deal, Democratic sources said.
Negotiators are trying to salvage a deal after Boehner pulled back Saturday from Obama's preferred $4 trillion plan. The deal reportedly fell apart over a dispute regarding eventual tax increases for the wealthiest Americans by allowing the Bush-era tax cuts to expire at the end of 2012.
Democrats are demanding revenue increases to reduce the impact of domestic spending cuts and ensure that the richest Americans shoulder some of the burden of a deal. House and Senate progressives, meanwhile, are balking at the idea of reining in spending on Medicare, Medicaid and Social Security.
The president insisted Monday that he is not looking to raise any taxes until 2013 or later. He claimed he has "bent over backward to work with the Republicans" and not force them to vote on any revenue hikes in the short term -- a politically toxic move for the GOP's conservative base.
In exchange, Obama said, he wants to ensure that the current progressive nature of the tax code is maintained, with higher-income Americans assessed higher tax rates.
Boehner has said that any such revenue-raising initiative would prevent the bulk of Republicans from supporting a more ambitious deal, even if it was one that included cutting spending and reforming entitlement programs.
Over the weekend, the speaker insisted the talks' parameters should be scaled back to focus on budget cuts alone.
The White House immediately pushed back, with a senior administration official saying Boehner had initially accepted the need to increase tax rates on wealthy Americans as part of a deal. But then, the official said, Republicans offered a different plan in talks with Obama that began last Thursday.
Boehner insists he never discussed an increase in tax rates.
During a meeting with House Republicans Tuesday morning, Boehner sought to clarify his negotiating position. The speaker, according to a prepared text of his remarks obtained by CNN from a GOP source in the room, said tax hikes were always "off the table."
But "comprehensive tax reform" had been discussed as a way to "generate additional revenue through economic growth," Boehner said.
The tax reform talks broke down, Boehner claimed, because Obama wanted to "increase the 'progressivity' of the current system -- a reference to Democrats' demand for more revenue from the wealthiest taxpayers.
At the heart of the GOP resistance is a bedrock principle pushed by conservative crusader Grover Norquist against any kind of tax increase. A pledge pushed by Norquist's group, Americans for Tax Reform, has been signed by more than 230 House members and 40 senators, almost all of them Republicans.
Source: CNN